Incitements for transportation collaboration by cost allocation

Abstract

In this paper, we focus on how cost allocation can be used as a means to create incentives for collaboration among companies, with the aim of reducing the total transportation cost. The collaboration is assumed to be preceded by a simultaneous invitation of the companies to collaborate. We make use of concepts from cooperative game theory, including the Shapley value, the Nucleolus and the EPM, and develop specific cost allocation mechanisms aiming to achieve large collaborations among many companies. The cost allocation mechanisms are tested on a case study that involves transportation planning activities. Although the case study is from a specific transportation sector, the findings in this paper can be adapted to collaborations in other types of transportation planning activities. Two of the cost allocation mechanisms ensure that any sequence of companies joining the collaboration represents a complete monotonic path, that is, any sequence of collaborating companies is such that the sequences of allocated costs are non-increasing for all companies.

A game-theoretic multi-stakeholder model for cost allocation in urban consolidation centres

“…Significantly, the authors prove that the Shapley value is in the core. As also shown by Dahlberg et al (2019), if an allocation mechanism satisfies both fairness and individual rationality properties, then there is good hope to provide strong incentives that can foster stakeholders' collaboration. Hezarkhani et al (2019) studied the relationship between a UCC and its suppliers; collaboration here is intended as stakeholders' willingness to process goods through the UCC, in order to reduce the unit costs for UCCs through the achievement of economies of scale.…”

“…Specifically, this paper considers the opportunity of involving a wider set of stakeholders in a coalition, which could participate to cost-sharing mechanisms associated with the operation of a UCC facility run by a local authority. To the best of our knowledge, no study, to date, has paid attention to cost allocation issues in order to sustain the existence of UCCs and, as a second criterion, to promote the participation of stakeholders according to fairness principles (Dahlberg et al, 2019).…”